Note:

Generally, the same wages couldn’t be used as both qualified sick leave wages and qualified family leave wages. The taxpayer could not benefit from both the credit for qualified sick and family leave wages and the ERC with respect to the same wages. Additionally, under ARP, the credit for qualified sick leave wages and qualified family leave wages didn’t apply to wages taken into account as payroll costs for a Small Business Interruption Loan under the Paycheck Protection Program (PPP) that had been forgiven or in connection with shuttered operator grants and restaurant revitalization grants.

Employers could elect to take advantage of these credits by:

Retaining (i.e., not paying) the federal income tax withholding, employee’s share of social security and Medicare taxes and/or the employer’s share of social security and Medicare taxes for all employees up to the amount of the eligible Sick Leave and/or Family Leave credits.

If deposits were reduced to zeroes as a result of (a) above and did not cover the full credit amount, the taxpayer could have requested an advanced payment(s) of the eligible Sick and/or Family Leave Credits (excluding any amounts retained by the reduction of federal tax deposits or payments outlined in (a) above) by submitting Form 7200 Advance Payment of Employer Tax Credits Due to COVID-19.